Reliance in this regard can be placed on the decision of Hon’ble Delhi High Court in case of Pepsi Foods Private Limited vs. ACIT [W.P.(C) 1334/2015] pronounced on 19-05-2015 wherein the petitioner has challenged the constitutional validity of Section 254(2A) of the Income Tax Act, 1961 (here-in-after referred to as ‘the Act’). The said section provides that Tribunal cannot extend the period of stay for a period exceeding 365 days from the initial grant of stay even if the delay in disposing off the appeal is not attributable to the assessee.
The petitioner pleaded that the said provision introduces a classification which has no nexus with the objective of the amendment. It clubs two different categories of assessee into one class, i.e., the assesses to whom the delay can be attributed and the assesses to whom the delay cannot be attributed and resulted in hostile discrimination against those assesses who are law abiding and did not cause any delay in hearing of their respective appeals. This per-se is violative of Article 14 of Constitution of India and this liable to be struck down. The Hon’ble High Court stated that
“Furthermore, the petitioners are correct in their submission that unequals have been treated equally. Assessees who, after having obtained stay orders and by their conduct delay the appeal proceedings, have been treated in the same manner in which assessees, who have not, in any way, delayed the proceedings in the appeal. The two classes of assessees are distinct and cannot be clubbed together. This clubbing together has led to hostile discrimination against the assessees to whom the delay is not attributable. It is for this reason that we find that the insertion of the expression – ‘even if the delay in disposing of the appeal is not attributable to the assessee’– by virtue of the Finance Act, 2008, violates the nondiscrimination clause of Article 14 of the Constitution of India. The object that appeals should be heard expeditiously and that assesses should not misuse the stay orders granted in their favour by adopting delaying tactics is not at all achieved by the provision as it stands.”
The Court finally answered the question in favour of the assessee and allowed the appeal thereby granting power to the Tribunal to allow stay beyond the period of 365 days.
Source- Pepsi Foods Pvt. Ltd vs. ACIT (Delhi High Court), W.P.(C) 1334/2015 & CM 2337/2015, Dated-19.05.2015
(Author – Aditya Singhania and Nischal Agarwal)